Geothermal Tax Credit

02.09.2018 The Continuing Resolution spending bill signed by President Trump in the early morning hours Friday, February 9, 2018, includes a measure to extend the tax credits for the industry-both residential and commercial. The reinstated tax credits are retroactive to January 1, 2017 and extend to December 31, 2021. A special note of consideration for commercial projects is commercial projects are eligible for the tax credit if commenced by December 31, 2021.

Qualifying geothermal heat pump models 'placed in service' between January 1, 2009 and December 31, 2021, are eligible for a one-time tax credit. Reduction in the tax credit percentage, under Section 48, are itemized below.

30% ~ January 1, 2017 thru December 31, 2019

26% ~ January 1, 2020 thru December 31, 2020

22% ~ January 1, 2021 thru December 31, 2021

Note: Clarifications issued by the IRS Notice 2013-70 explain that the distribution system for the home and back-up emergency heating or cooling system are not eligible for the tax credit.

It is recommended to consult with a tax preparer about receiving this credit. No proof of purchase will be required; however in case of an audit, owners are encouraged to keep a detailed invoice of their purchase on file. The contractor who sold and installed the system should list the purchase as a “Geothermal Heat Pump” on the invoice and that it “Exceeds requirements of Energy Star program currently in effect”. The taxpayer must have a copy of the Manufacturer's Certification (see link below). A copy of the Manufacturer's Certification document is not submitted with the taxpayer's return, but must be retained by the taxpayer for tax records.